# EUR-Lex - 52013PC0044 - EN

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# 52013PC0044

**Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on information accompanying transfers of funds /* COM/2013/044 final - 2013/0024 (COD) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE PROPOSAL

Grounds for and objectives of the proposal

The purpose of this proposal is to revise
Regulation (EC) No 1781/2006 on information on the payer accompanying transfers
of funds[1]
(hereinafter referred to as the "Funds Transfers Regulation") in ways
which improve traceability of
payments and ensure that the EU framework remains fully compliant with
international standards.

General context

The Funds Transfers Regulation lays down
rules for payment service providers to send information on the payer throughout
the payment chain for the purposes of prevention, investigation and detection
of money laundering and terrorist financing.

The Regulation was to a large extent based
on Special Recommendation VII on wire transfers adopted by the Financial Action
Task Force[2]
(FATF) and aims to ensure that this international standard is transposed
uniformly through the Union and, in particular, that there is no discrimination
between national payments within a Member State and cross-border payments
between Member States.

Against the background of the changing
nature of money laundering and terrorist financing threats, facilitated by a
constant evolution of technology and means at the disposal of criminals, the
FATF has undertaken a fundamental review of the international standards, which
culminated in the adoption of a new set of Recommendations in February 2012.

In parallel to this process, the European
Commission has also been undertaking its own review of the EU framework. This
review has comprised an external study published by the Commission on the
application of the Funds Transfers Regulation, extensive contacts and
consultations with private stakeholders and civil society organisations, as
well as with representatives of EU Member State regulatory and supervisory
authorities.

The implications of this work are that the
EU framework, including the Funds Transfers Regulation, will need to evolve and
adjust to changes which should see an increased focus placed on (a) the effectiveness
of regimes to counter money laundering and terrorist financing, (b) greater
clarity and consistency of the rules across Member States, and (c) a broadened
scope designed to address new threats and vulnerabilities.

Existing provisions in this area

Directive 2005/60/EC of the European
Parliament and of the Council of 26 October 2005 on the prevention of the use
of the financial system for the purpose of money laundering and terrorist
financing[3]
(hereinafter referred to as the
"Third AML Directive") sets out the framework designed to protect the soundness, integrity
and stability of credit and financial institutions and confidence in the
financial system as a whole, against the risks of money laundering and
terrorist financing.

Directive 2006/70/EC[4] (the "implementing Directive") lays down implementing measures for
the Third AML Directive as regards the definition of politically exposed
persons and the technical criteria for simplified customer due diligence
procedures and for exemption on grounds of a financial activity conducted on an
occasional or very limited basis.

The Funds Transfers Regulation complements
those measures by ensuring that basic information on the payer of transfers of
funds is immediately available to appropriate law enforcement and/or
prosecutorial authorities to assist them in detecting, investigating,
prosecuting terrorists or other criminals and tracing
the assets of terrorists.

Consistency with other policies and objectives of the Union

The proposal is
consistent with and complements the Proposal for a Directive of the European
Parliament and the Council on the prevention of the use of the financial system
for the purpose of money laundering and terrorist financing. These two
legislative instruments pursue the common objective of revising the existing
anti-money laundering and counter terrorist financing EU framework in order to
improve its effectiveness while ensuring its compliance with international
standards.

The proposal is also consistent with the
objectives of the EU's Internal Security Strategy[5], which identifies the most
urgent challenges to EU security in the years to come and proposes five
strategic objectives and specific actions for 2011-2014 to help make the EU
more secure. This includes tackling money laundering and preventing terrorism,
in particular, by updating the EU framework with a view to enhancing the
transparency of information on beneficial ownership of legal persons.

With regard to data protection, the
proposed clarifications on the processing of personal data are in line with the
approach set out in the Commission's recent data protection proposals[6].

With regard to sanctions, the proposal to
introduce a set of minimum principle-based rules to strengthen administrative sanctions and measures is consistent with the Commission's policy
as outlined in its Communication "Reinforcing sanctioning regimes in the
financial services sector"[7].

2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

Consultation of interested parties

In April 2012, the Commission
adopted a report on the application of Directive 2005/60/EC and solicited
comments from all stakeholders[8].
The annex to this report, in particular, focused on cross-border wire transfers
and, namely, on the two new requirements of including beneficiary information
in wire transfers, and taking freezing action with respect to UN Resolutions.

The Commission received only 4
contributions referring expressly to the annex to the report. Respondents were
asking for a consultation of interested parties from all countries and
territories affected by the Funds Transfers Regulation, highlighting the need
that any additional requirement or obligation imposed on payment service
providers would be proportionate and straightforward to meet.

Extensive consultations with interested
parties have been undertaken in the context of the external consultants' study[9] carried out on behalf of the
European Commission, which approached 108 stakeholders and involved phone
interviews and the completion of a structured questionnaire.

Use of expertise

Over the course of 2012, a study by
external consultants was carried out on behalf of the Commission to gather evidence about how the Funds Transfers Regulation is working in Member States and the problems which have arisen[10].

The study, in particular, provides a number of recommendations, including:

–
introduce the obligation for Payment Service
Providers to ensure that all originator and beneficiary information is retained
with wire transfers;

–
define what beneficiary information needs to be
verified, and by whom;

–
consider introducing a “simplified” regime for
cross-border wire transfers amounting to EUR 1 000 or less, unless there is
suspicion of money-laundering or terrorist financing;

–
further clarify the reporting obligations for
Payment Service Providers;

–
explicitly prohibit the execution of wire
transfers if it does not comply with the necessary requirements (completeness
and accuracy of the information);

–
beneficiary Payment Service Providers to
implement effective risk-based policies and procedures to determine appropriate
follow-up actions;

–
consider data protection implications.

Impact assessment

This proposal is accompanied by an impact
assessment which identifies the main problems in the current EU anti-money
laundering/combating terrorist financing legislative framework[11]: (i) inconsistency with the recently revised international standards; (ii) different
interpretation of rules across Member States; and (iii) inadequacies and
loopholes with respect to the new money laundering and terrorist financing
risks. As a consequence, the effectiveness of counter money laundering and
terrorist financing regimes is reduced with a negative reputational, economic
and financial impact.

The impact assessment analyses the following three scenarios:

(1)
a base-line scenario that the Commission takes
no action;

(2)
an adjustment scenario that entails limited
changes to the Funds Transfers Regulation necessary to either (i) align the
legislative text to the revised international standards, or (ii) to ensure a
sufficient level of consistency between national rules, or (iii) to address the
most important shortcomings concerning the new emerging threats; and

(3)
a full harmonisation scenario that entails major
policy changes and additional elements of harmonisation, in recognition of any
EU specificities.

The analysis carried out in the impact
assessment has demonstrated that the second scenario is the most balanced in aligning the Funds Transfers Regulation with
the revised international standards while ensuring sufficient level of
consistency between national rules and flexibility in their implementation.

In addition, the impact assessment analysed
the impact of the legislative proposals on the Fundamental Rights. In line with
the Charter of Fundamental rights, the proposals seek in particular to ensure
protection of personal data (Article 8 of the Charter) as regards the storage
and transfer of personal data.

3.           LEGAL ELEMENTS OF THE
PROPOSAL

Legal basis

Article 114 of the Treaty on the
Functioning of the European Union.

Subsidiarity and proportionality

There is a general consensus, emanating
from all stakeholders (in particular Member States and the payment industry),
that the objectives of the proposal cannot be sufficiently achieved by the
Member States and would be better attained by EU action.

Non-coordinated action by Member States
alone in the field of cross-border transfers of funds could significantly
impact on the smooth functioning of payment systems at EU level, and therefore
damage the internal market in the field of financial services (see Recital 2 of
the Funds Transfers Regulation).

By the scale of its action, the Union shall
guarantee a uniform transposition of new FATF Recommendation 16 through the EU,
and, in particular, that there is no discrimination between national payments
within a Member State and cross-border payments between Member States.

The proposal therefore complies with the
subsidiarity principle.

With regard to the proportionality
principle, in conformity with the analysis carried out in the impact assessment
the proposal transposes the revised FATF Recommendation on "wire
transfers" by introducing the minimum requirements essential to ensure the
traceability of transfers of funds without going beyond what is necessary to
achieve its objectives.

4.           BUDGETARY IMPLICATION

This proposal has no impact on the Union
budget.

5.           ADDITIONAL INFORMATION

Detailed explanation of the proposal

In line with new FATF Recommendation 16 on
"wire transfers" and the accompanying Interpretative note, the
proposed changes are aimed at addressing areas where gaps in transparency still
remain.

The intention is to enhance traceability by
imposing the following main requirements:

–
include information on the payee;

–
with regard to the scope of the Regulation,
clarify that credit or debit cards, or mobile telephone or any other digital or
IT device become subject to the provisions of the regulation if they are used
to transfer funds person to person. In addition, clarify that below EUR 1 000,
in the case of fund transfers outside the EU, a lighter regime of non-verified
information on the payer and the payee applies (as opposed to possible
exemptions from scope as in Regulation (EC) No 1781/2006);

–
with regard to obligations of the Payment
Service Provider (PSP) of the payee, imposing a requirement to verify the
identity of the beneficiary (where not previously identified) for payments
originating outside the EU and where the amount is more than EUR 1 000. With
regard to the PSP of the payee and the intermediary PSP, an obligation to
establish risk-based procedures for determining when to execute, reject or
suspend a transfer of funds which lacks the required information and to
determine appropriate follow-up action;

–
with regard to data protection, align the
requirements of record keeping of the information with the FATF standards, in
accordance with the new regime foreseen by the Directive [xxxx/yyyy];

–
with regard to sanctions, reinforcement of
sanctioning powers for competent authorities and a requirement to coordinate
actions when dealing with cross-border cases; a requirement for sanctions
imposed for breaches to be published; and a requirement to establish effective
mechanisms to encourage reporting of breaches of the provisions of the
Regulation.

European Economic Area

The proposed act concerns an EEA matter and
should therefore extend to the European Economic Area.

2013/0024 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on information accompanying transfers of
funds

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the
European Commission,

After transmission of the draft legislative
act to the national Parliaments,

Having regard to the opinion of the
European Economic and Social Committee[12],

Having regard to the opinion of the
European Central Bank[13],

After consulting the European Data Protection
Supervisor[14],

Acting in accordance with the ordinary
legislative procedure,

Whereas:

(1)       Flows of dirty money
through transfers of funds can damage the stability and reputation of the
financial sector and threaten the internal market. Terrorism shakes the very
foundations of our society. The soundness, integrity and stability of the
system of transfers of funds and confidence in the financial system as a whole
could be seriously jeopardised by the efforts of criminals and their associates
either to disguise the origin of criminal proceeds or to transfer funds for
terrorist purposes.

(2)       In order to facilitate
their criminal activities, money launderers and terrorist financers could try
to take advantage of the freedom of capital movements entailed by the integrated
financial area, unless certain coordinating measures are adopted at Union
level. By its scale, Union action should ensure that Recommendation 16 on wire
transfers of the Financial Action Task Force (FATF), adopted in February 2012
is transposed uniformly throughout the Union, and, in particular, that there is
no discrimination between national payments within a Member State and cross
border payments between Member States. Uncoordinated action by Member States
alone in the field of cross border transfers of funds could have a significant
impact on the smooth functioning of payment systems at Union level and
therefore damage the internal market in the field of financial services.

(3)       It has been pointed out in
the Union’s revised Strategy on Terrorist Financing of 17 July 2008[15] that efforts have to be
maintained to prevent terrorist financing and the use by suspected terrorists
of their own financial resources. It is recognised that the FATF is constantly
seeking to improve its Recommendations and working towards a common
understanding of how these should be implemented. It is noted in the Union's revised Strategy that implementation of those Recommendations by all FATF members
and members of FATF-style regional bodies is assessed on a regular basis and that
from this point of view a common approach to implementation by Member States is
important.

(4)       In order to prevent
terrorist funding, measures aimed at the freezing of funds and economic
resources of certain persons, groups and entities have been taken, including
Regulation (EC) No 2580/2001 of 27 December 2001 on specific restrictive
measures directed against certain persons and entities with a view to combating
terrorism[16],
and Council Regulation (EC) No 881/2002 of 27 May 2002 imposing certain specific
restrictive measures directed against certain persons and entities associated
with the Al-Qaida network[17].
To that same end, measures aimed at protecting the financial system against the
channelling of funds and economic resources for terrorist purposes have been
taken. Directive [xxxx/yyyy] of the European Parliament and of the Council of
on the prevention of the use of the financial system for the purpose of money
laundering and terrorist financing[18]
contains a number of such measures. Those measures do not, however, fully
prevent terrorists and other criminals from having access to payment systems
for moving their funds.

(5)       In order to foster a
coherent approach in the international context in the field of combating money
laundering and terrorist financing, further Union action should take account of
developments at that level, namely the International Standards on combating money-laundering
and the financing of terrorism and proliferation adopted in 2012 by the FATF,
and in particular Recommendation 16 and the revised interpretative note for its
implementation.

(6)       The full traceability of
transfers of funds can be a particularly important and valuable tool in the
prevention, investigation and detection of money laundering or terrorist
financing. It is therefore appropriate, in order to ensure the transmission of
information throughout the payment chain, to provide for a system imposing the
obligation on payment service providers to have transfers of funds accompanied
by information on the payer and the payee.

(7)       The provisions of this
Regulation apply without prejudice to national legislation implementing Directive
95/46/EC of the European Parliament and of the Council of 24 October 1995 on
the protection of individuals with regard to the processing of personal data
and on the free movement of such data[19].
For example, personal data collected for the purpose of complying with this
Regulation should not be further processed in a way inconsistent e with Directive
95/46/EC. In particular, further processing for commercial purposes should be
strictly prohibited. The fight against money laundering and terrorist financing
is recognised as an important public interest ground by all Member States.
Hence, in the application of this Regulation, the transfer of personal data to
a third country which does not ensure an adequate level of protection in the
meaning of Article 25 of Directive 95/46/EC should be permitted according to
Article 26 (d) of the same Directive.

(8)       Persons who merely convert
paper documents into electronic data and are acting under a contract with a
payment service provider do not fall within the scope of this Regulation; the
same applies to any natural or legal person who provides payment service
providers solely with messaging or other support systems for transmitting funds
or with clearing and settlement systems.

(9)       It is appropriate to
exclude from the scope of this Regulation transfers of funds that represent a
low risk of money laundering or terrorist financing. Such exclusions should
cover credit or debit cards, mobile telephones or other digital or information
technology (IT) devices, Automated Teller Machine (ATM) withdrawals, payments
of taxes, fines or other levies, and transfers of funds where both the payer
and the payee are payment service providers acting on their own behalf. In
addition, in order to reflect the special characteristics of national payment
systems, Member States may exempt electronic giro payments, provided that it is
always possible to trace the transfer of funds back to the payer. However,
there must be no exemption when a debit or credit card, a mobile telephone or
other digital or IT prepaid or postpaid device is used in order to effect a
person-to-person transfer.

(10)     In order not to impair the
efficiency of payment systems, the verification requirements for transfers of
funds made from an account should be separate from those for transfers of funds
not made from an account. In order to balance the risk of driving transactions
underground by imposing overly strict identification requirements against the
potential terrorist threat posed by small transfers of funds, the obligation to
check whether the information on the payer is accurate should, in the case of
transfers of funds not made from an account, be imposed only in respect of
individual transfers of funds that exceed EUR 1 000,. For transfers of funds
made from an account, payment service providers should not be required to
verify information on the payer accompanying each transfer of funds, where the
obligations under Directive [xxxx/yyyy] have been met.

(11)     Against the background of
the Union payment legislation - Regulation (EC) No 924/2009 of
the European Parliament and of the Council of 16 September 2009 on cross-border
payments in the Community[20],
Regulation (EU) No 260/2012 of the European Parliament and of the Council of 14
March 2012 establishing technical and business requirements for credit
transfers and direct debits in euro[21] and
Directive 2007/64/EC of the European Parliament and of the Council of 13
November 2007 on payment services in the internal market[22] - it is
sufficient to provide for simplified information on the payer to accompany
transfers of funds within the Union.

(12)     In order to allow the
authorities responsible for combating money laundering or terrorist financing
in third countries to trace the source of funds used for those purposes,
transfers of funds from the Union to outside the Union should carry complete
information on the payer and the payee. Those authorities should be granted
access to complete information on the payer only for the purposes of
preventing, investigating and detecting money laundering or terrorist
financing.

(13)     For transfers of funds from
a single payer to several payees to be sent in an inexpensive way in batch
files containing individual transfers from the Union to outside the Union,
provision should be made for such individual transfers to carry only the
account number of the payer or his unique transaction identifier provided that complete
information on the payer and the payee is contained in the batch file.

(14)     In order to check whether
the required information on the payer and the payee accompanies transfers of
funds, and to help to identify suspicious transactions, the payment service
provider of the payee and the intermediary payment service provider should have
effective procedures in place in order to detect whether information on the
payer and the payee is missing.

(15)     Owing to the potential
terrorist financing threat posed by anonymous transfers, it is appropriate to
require payment service providers to request information on the payer and the
payee. In line with the risk based approach developed by FATF, it is
appropriate to identify areas of higher and lower risk with a view to better
targeting money laundering and terrorist financing risks. Accordingly, the
payment service provider of the payee and the intermediary service provider should
establish effective risk-based procedures for cases where a transfer of funds
lacks the required payer and payee information, in order to decide whether to execute,
reject or suspend that transfer and what appropriate follow-up action to take.
Where the payment service provider of the payer is established outside the
territory of the Union, enhanced customer due diligence should be applied, in
accordance with Directive [xxxx/yyyy], in respect of cross-border correspondent
banking relationships with that payment service provider.

(16)     The payment service
provider of the payee and the intermediary payment service provider should
exercise special vigilance, assessing the risks, when it becomes aware that
information on the payer and the payee is missing or incomplete and should
report suspicious transactions to the competent authorities, in accordance with
the reporting obligations set out in Directive [xxxx/yyyy] and national
implementing measures.

(17)     The provisions on transfers
of funds where information on the payer or the payee is missing or incomplete
apply without prejudice to any obligations on payment service providers and the
intermediary payment service providers to suspend and/or reject transfers of
funds which violate provisions of civil, administrative or criminal law.

(18)     Until technical limitations
that may prevent intermediary payment service providers from satisfying the
obligation to transmit all the information they receive on the payer are
removed, those intermediary payment service providers should keep records of
that information. Such technical limitations should be removed as soon as
payment systems are upgraded.

(19)     Since in criminal
investigations it may not be possible to identify the data required or the
individuals involved until many months, or even years, after the original
transfer of funds and in order to be able to have access to essential evidence
in the context of investigations, it is appropriate to require payment service
providers to keep records of information on the payer and the payee for the
purposes of preventing, investigating and detecting money laundering or
terrorist financing. This period should be limited.

(20)     To
enable prompt action to be taken in the fight against terrorism, payment
service providers should respond promptly
to requests for information on the payer from the authorities responsible for combating money laundering or terrorist
financing in the Member State where they are established.

(21)     The
number of working days in the Member State of the payment service provider of the payer determines the number of
days to respond to requests for information on the payer.

(22)     In
order to improve compliance with the requirements of this Regulation and
following the Commission Communication of 9 December 2010 entitled 'Reinforcing
sanctioning regimes in the financial services sector'[23], the power to adopt
supervisory measures and the sanctioning powers of competent authorities should
be enhanced. Administrative sanctions should be foreseen and, given the importance of the
fight against money laundering and terrorist financing, Member States should
lay down sanctions that are effective, proportionate and
dissuasive. Member States should notify the Commission thereof, as
well as the European Supervisory Authority (European Banking Authority)
(hereinafter ‘EBA’), established by Regulation (EU) No 1093/2010 of the
European Parliament and of the Council of 24 November 2010 establishing a
European Supervisory Authority (European Banking Authority), amending Decision
No 716/2009/EC and repealing Commission Decision 2009/78/EC; the European
Supervisory Authority (European Insurance and Occupational Pensions Authority)
(hereinafter ‘EIOPA’), established by Regulation (EU) No 1094/2010 of the
European Parliament and of the Council of 24 November 2010 establishing a
European Supervisory Authority (European Insurance and Occupational Pensions
Authority), amending Decision No 716/2009/EC and repealing Commission Decision
2009/79/EC; and the European Supervisory Authority (European Securities and
Markets Authority) (hereinafter ‘ESMA’), established by Regulation (EU) No
1095/2010 of the European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Securities and Markets
Authority), amending Decision No 716/2009/EC and repealing Commission Decision
2009/77/EC.

(23)     In order to ensure uniform
conditions for the implementation of Articles XXX of this Regulation,
implementing powers should be conferred on the Commission. Those powers should
be exercised in accordance with Regulation (EU) No 182/2011 of the European
Parliament and of the Council of 16 February 2011 laying down the rules and
general principles concerning mechanisms for control by Member States of the
Commission's exercise of implementing powers[24].

(24)     A number of countries and
territories which do not form part of the territory of the Union share a
monetary union with a Member State, form part of the currency area of a Member
State or have signed a monetary convention with the Union represented by a
Member State, and have payment service providers that participate directly or
indirectly in the payment and settlement systems of that Member State. In order
to avoid the application of this Regulation to transfers of funds between the
Member States concerned and those countries or territories having a significant
negative effect on the economies of those countries or territories, it is
appropriate to provide for the possibility for such transfers of funds to be
treated as transfers of funds within the Member States concerned.

(25)     In view of the amendments
that would need to be made to Regulation (EC) No 1781/2006 of 15 November 2006
on information on the payer accompanying transfers of funds, it should be
repealed for reasons of clarity.

(26)     Since the objectives of
this Regulation cannot be sufficiently achieved by Member States and can
therefore, by reason of the scale or effects of the action, be better achieved
at Union level, the Union may adopt measures, in accordance with the principle
of subsidiarity as set out in Article 5 of the Treaty. In accordance with the
principle of proportionality, as set out in that Article, this Regulation does
not go beyond what is necessary in order to achieve those objectives.

(27)     This Regulation respects
the fundamental rights and observes the principles recognized by the Charter of
Fundamental Rights of the European Union, in particular the right to respect
for private and family life (Article 7), the right to the protection of
personal data (Article 8) and the right to an effective remedy and to a fair
trial (Article 47) and the principle of ne bis in idem.

(28)     In order to ensure a smooth
introduction of the new anti-money laundering and terrorist financing
framework, it is appropriate to coincide the application date of this
Regulation with the end of the transposition deadline for Directive [xxxx/yyyy],

HAVE
ADOPTED THIS REGULATION:

CHAPTER I

SUBJECT MATTER, DEFINITIONS AND SCOPE

Article 1
Subject matter

This Regulation lays down rules on the information
on the payer and the payee accompanying transfers of funds for the purposes of
prevention, detection and investigation of money laundering and terrorist
financing, when transferring funds.

Article 2
Definitions

For the purposes of this Regulation, the
following definitions shall apply:

(1)
‘terrorist financing’ means terrorist financing
as defined in Article 1(4) of Directive [xxxx/yyyy];

(2)
‘money laundering’ means the money laundering activities
referred to in Article 1(2) or (3) of Directive [xxxx/yyyy];

(3)
‘payer’ means a natural or legal person who either
carries out a transfer of funds from his or her own account or who places an
order for a transfer of funds;

(4)
‘payee’ means a natural or legal person who is
the intended recipient of transferred funds;

(5)
‘payment service provider’ means a natural or
legal person who provides the service of transferring funds in his or her
professional capacity;

(6)
‘intermediary payment service provider’ means a
payment service provider, neither of the payer nor of the payee, who receives
and transmits a fund transfer on behalf of the payment service provider of the
payer or of the payee or of another intermediary payment service provider;

(7)
‘transfer of funds’ means any transaction
carried out by electronic means on behalf of a payer through a payment service
provider, with a view to making funds available to a payee through a payment
service provider, irrespective of whether the payer and the payee are the same
person;

(8)
‘batch file transfer’ means a bundle of several
individual transfers of funds put together for transmission;

(9)
‘unique transaction identifier’ means a
combination of letters or symbols determined by the payment service provider,
in accordance with the protocols of the payment and settlement systems or
messaging systems used for the fund transfer, which permits traceability of the
transaction back to the payer and the payee;

(10)
‘a person-to-person’ transfer of funds means a
transaction between two natural persons.

Article 3
Scope

1.           This Regulation shall
apply to transfers of funds, in any currency, which are sent or received by a
payment service provider established in the Union.

2.           This Regulation shall not
apply to transfers of funds carried out using a credit or debit card, or a
mobile telephone or any other digital or information technology (IT) device,
where the following conditions are fulfilled:

(a)
the card or device is used to pay goods and
services;

(b)
the number of the abovementioned card or device
accompanies all transfers flowing from the transaction.

However, this Regulation shall apply when a
credit or debit card, or a mobile telephone, or any other digital or IT device
is used in order to effect a person-to-person transfer of funds.

3.           This Regulation shall not
apply to transfers of funds:

(a)
where the transfer of funds entails the payer
withdrawing cash from his or her own account;

(b)
where funds are transferred to public
authorities as payment for taxes, fines or other levies within a Member State;

(c)
where both the payer and the payee are payment
service providers acting on their own behalf.

CHAPTER II

OBLIGATIONS ON PAYMENT SERVICE PROVIDERS

Section 1

Obligations on the payment service
provider of the payer

Article 4
Information accompanying transfers of funds

1.           The payment service
provider of the payer shall ensure that the transfer of funds is accompanied by
the following information on the payer:

(a)
the name of the payer;

(b)
the payer's account number, where such an
account is used to process the transfer of funds, or a unique transaction
identifier where no such account is used for that purpose;

(c)
the payer’s address, or national identity
number, or customer identification number, or date and place of birth.

2.           The payment service
provider of the payer shall ensure that transfers of funds are accompanied by
the following information on the payee:

(a)
the name of the payee; and

(b)
the payee's account number, where such an account
is used to process the transaction, or a unique transaction identifier where no
such account is used for that purpose.

3.           Before transferring the
funds, the payment service provider of the payer shall verify the accuracy of
the information referred in paragraph 1 on the basis of documents, data or
information obtained from a reliable and independent source.

4.           Where funds are
transferred from the payer's account, the verification referred to in paragraph
3 shall be deemed to have taken place in the following cases:

(a)
where a payer’s identity has been verified in
connection with the opening of the account in accordance with Article 11 of
Directive [xxxx/yyyy]and the information obtained by this verification has been
stored in accordance with Article 39 of that Directive ;

or

(b)
where Article 12(5) of Directive [xxxx/yyyy]
applies to the payer.

5.           However, by way of
derogation from paragraph 3, in the case of transfers of funds not made from an
account, the payment service provider of the payer shall not verify the
information referred to in paragraph 1 if the amount does not exceed EUR 1 000
and it does not appear to be linked to other transfers of funds which, together
with the transfer in question, exceed EUR 1 000.

Article 5
Transfers of funds within the Union

1.           By way of derogation from
Article 4(1) and (2), where the payment service provider(s) of both the payer
and the payee are established in the Union, only the account number of the
payer or his unique transaction identifier shall be provided at the time of the
transfer of funds.

2.           Notwithstanding paragraph
1, the payment service provider of the payer shall, upon request from the
payment service provider of the payee or the intermediary payment service
provider, make available the information on the payer or the payee in
accordance with Article 4, within three working days of receiving that request.

Article 6
Transfers of funds to outside the Union

1.           In the case of batch file
transfers from a single payer where the payment service providers of the payees
are established outside the Union, Article 4(1) and (2) shall not apply to the
individual transfers bundled together therein, provided that the batch file
contains the information referred to in that Article and that the individual
transfers carry the account number of the payer or his unique transaction identifier.

2.           By way of derogation from
Article 4(1) and (2), where the payment service provider of the payee is established
outside the Union, transfers of funds amounting to EUR 1 000 or less shall be
accompanied only by:

(a)
the name of the payer;

(b)
the name of the payee;

(c)
the account number of both the payer and the
payee or the unique transaction identifier.

This information need not be verified for
accuracy, unless there is a suspicion of money laundering or terrorist
financing.

Section 2

Obligations on the payment service
provider of the payee

Article 7
Detection of missing information on the payer and the payee

1.           The payment service
provider of the payee shall detect whether the fields relating to the
information on the payer and the payee in the messaging system or the payment
and settlement system used to effect the transfer of funds, have been filled in
using the characters or inputs admissible within the conventions of that
system.

2.           The payment service
provider of the payee shall have effective procedures in place in order to
detect whether the following information on the payer and the payee is missing:

(a)
for transfers of funds where the payment service
provider of the payer is established in the Union, the information required
under Article 5;

(b)
for transfers of funds where the payment service
provider of the payer is established outside the Union, the information on the
payer and the payee referred to in Article 4(1) and (2) and where applicable,
the information required under Article 14;

and

(c)
for batch file transfers where the payment
service provider of the payer is established outside the Union the information
referred to in Article 4(1) and (2) in respect of the batch file transfer.

3.           For transfers of funds
amounting to more than EUR 1 000, where the payment service provider of the
payer is established outside the Union, the payment service provider of the
payee shall verify the identity of the payee if his or her identity has not already
been verified.

4.           For transfers amounting to
EUR 1 000 or less, where the payment service provider of the payer is
established outside the Union, the payment service provider of the payee need
not verify the information pertaining to the payee, unless there is a suspicion
of money laundering or terrorist financing.

Article 8
Transfers of funds with missing or incomplete information on the payer and
the payee

1.           The payment service
provider of the payee shall establish effective risk-based procedures for determining
when to execute, reject or suspend a transfer of funds lacking the required
payer and payee information and the appropriate follow up action.

If the payment service provider of the payee
becomes aware, when receiving transfers of funds, that information on the payer
and the payee required under Articles 4(1) and (2), 5(1) and 6 is missing or
incomplete, it shall either reject the transfer or ask for complete information
on the payer and the payee.

2.           Where a payment service
provider regularly fails to supply the required information on the payer, the
payment service provider of the payee shall take steps, which may initially
include the issuing of warnings and setting of deadlines, before either
rejecting any future transfers of funds from that payment service provider or
deciding whether or not to restrict or terminate its business relationship with
that payment service provider.

The payment service provider of the payee shall
report that fact to the authorities responsible for combating money laundering
or terrorist financing.

Article 9
Assessment and Reporting

The payment service provider of the payee
shall consider missing or incomplete information on the payer and the payee as
a factor in assessing whether the transfer of funds, or any related transaction,
is suspicious, and whether it must be reported to the Financial Intelligence
Unit.

Section 3

Obligations on intermediary payment
service providers

Article 10
Keeping information on the payer and the payee with the transfer

Intermediary payment service providers
shall ensure that all the information received on the payer and the payee that
accompanies a transfer of funds is kept with the transfer.

Article 11
Detection of missing information on the payer and the payee

1.           The intermediary payment
service provider shall detect whether the fields relating to the information on
the payer and the payee in the messaging system or the payment and settlement
system used to effect the transfer of funds, have been filled in using the
characters or inputs admissible within the conventions of that system.

2.           The intermediary payment
service provider shall have effective procedures in place in order to detect
whether the following information on the payer and the payee is missing:

(a)
for transfers of funds where the payment service
provider of the payer is established in the Union, the information required
under Article 5;

(b)
for transfers of funds where the payment service
provider of the payer is established outside the Union, the information on the
payer and the payee referred to in Article 4(1) and (2) or, where applicable,
the information required under Article 14;

and

(c)
for batch file transfers, where the payment
service provider of the payer is established outside the Union, the information
referred to in Article 4(1) and (2) in respect of the batch file transfer.

Article 12
Transfers of funds with missing or incomplete information on the payer and
the payee

1.           The intermediary payment
service provider shall establish effective risk-based procedures for determining
when to execute, reject or suspend a transfer of funds lacking the required
payer and payee information and the appropriate follow up action.

If the intermediary payment service provider
becomes aware, when receiving transfers of funds, that information on the payer
and the payee required under Articles 4(1) and (2), 5(1) and 6 is missing or
incomplete, it shall either reject the transfer or ask for complete information
on the payer and the payee.

2.           Where a payment service
provider regularly fails to supply the required information on the payer, the intermediary
payment service provider shall take steps, which may initially include the
issuing of warnings and setting of deadlines, before either rejecting any
future transfers of funds from that payment service provider or deciding
whether or not to restrict or terminate its business relationship with that
payment service provider.

The intermediary payment service provider shall
report that fact to the authorities responsible for combating money laundering
or terrorist financing.

Article 13
Assessment and Reporting

The intermediary payment service provider
shall consider missing or incomplete information on the payer and the payee as
a factor in assessing whether the transfer of funds, or any related transaction,
is suspicious, and whether it must be reported to the Financial Intelligence
Unit.

Article 14
Technical limitations

1.           This
Article shall apply where the payment service provider of the payer is established outside
the Union and the intermediary payment service provider is
situated within the Union.

2.           Unless the intermediary
payment service provider becomes aware, when receiving a transfer of funds,
that information on the payer required under this Regulation is missing or
incomplete, it may use a payment system with technical limitations which
prevents information on the payer from accompanying the transfer of funds to
send transfers of funds to the payment service provider of the payee.

3.           Where
the intermediary payment service provider becomes aware, when receiving a
transfer of funds, that information on the payer required under this Regulation
is missing or incomplete, it shall only use a payment system with technical
limitations if it is able to inform the payment service provider of the payee
thereof, either within a messaging or payment system that provides for
communication of this fact or through another procedure, provided that the
manner of communication is accepted by, or agreed between, both payment service
providers.

4.           Where
the intermediary payment service provider uses a payment system with technical
limitations, the intermediary payment service provider shall, upon request from
the payment service provider of the payee, make
available to that payment service provider all the information on the payer
which it has received, irrespective of whether it is complete or not, within
three working days of receiving that request.

CHAPTER III

COOPERATION AND RECORD KEEPING

Article 15

Cooperation obligations

Payment service providers shall respond fully and
without delay, in accordance with the procedural requirements established in
the national law of the Member State in which they are established, to
enquiries from the authorities responsible for combating money laundering or
terrorist financing of that Member State concerning the information required
under this Regulation.

Article 16
Record keeping

The payment service provider of the payer
and the payment service provider of the payee shall keep records of the
information referred to in Articles 4, 5, 6 and 7 for five years. In the cases
referred to in Article 14(2) and (3), the intermediary payment service provider
must keep records of all information received for five years. Upon expiry of this
period, personal data must be deleted, unless otherwise provided for by
national law, which shall determine under which circumstances payment service
providers may or shall further retain data. Member States may allow or require
further retention only if necessary for the prevention, detection or
investigation of money laundering and terrorist financing. The maximum
retention period following carrying-out of the transfer of funds shall not
exceed ten years.

CHAPTER IV

SANCTIONS AND MONITORING

Article 17
Sanctions

1.           Member States shall lay
down the rules on administrative measures and sanctions applicable to breaches
of the provisions of this Regulation and shall take all measures necessary to
ensure that they are implemented. The sanctions provided for must be effective,
proportionate and dissuasive.

2.           Member States shall ensure
that where obligations apply to payment services providers, in case of a breach
sanctions may be applied to the members of the management body and to any other
individuals who under national law are responsible for the breach.

3.           By [24 months after
entry into force of this Regulation] Member States shall notify the rules
referred to in paragraph 1 to the Commission and to the Joint Committee of the
EBA, EIOPA and ESMA. They shall notify the Commission and the Joint Committee
of the EBA, EIOPA and ESMA without delay of any subsequent amendment thereto.

4.           Competent authorities
shall have all investigatory powers that are necessary for the exercise of
their functions. In the exercise of their sanctioning powers, competent
authorities shall cooperate closely to ensure that sanctions or measures
produce the desired results and coordinate their action when dealing with cross
border cases.

Article 18
Specific provisions

1.           This
Article shall apply to the following breaches:

(a)
repeated non-inclusion of required information
on the payer and payee, in breach of Articles 4, 5 and 6;

(b)
serious failure of payment service providers to
ensure record keeping in conformity with Article 16;

(c)
failure of the payment service provider to put in
place effective risk-based policies and procedures required under Articles 8 and
12.

2.           In the cases referred to in paragraph 1, administrative measures and sanctions
that can be applied include at least the following:

(a)
a public statement which indicates the natural
or legal person and the nature of the breach;

(b)
an order requiring the natural or legal person
to cease the conduct and to desist from a repetition of that conduct;

(c)
in case of a payment service provider, withdrawal
of the authorisation of the provider;

(d)
a temporary ban against any member of the
payment service provider's management body or any other natural person, who is
held responsible, to exercise functions with the payment service provider;

(e)
in case of a legal person, administrative
pecuniary sanctions of up to 10 % of the total annual turnover of that legal
person in the preceding business year; where the legal person is a subsidiary
of a parent undertaking, the relevant total annual turnover shall be the total
annual turnover resulting from the consolidated account of the ultimate parent
undertaking in the preceding business year;

(f)
in case of a natural person, administrative
pecuniary sanctions of up to EUR 5 000 000, or in the Member States where the
Euro is not the official currency, the corresponding value in the national
currency on the date of entry into force of this Regulation;

(g)
administrative pecuniary sanctions of up to
twice the amount of the profits gained or losses avoided because of the breach
where those can be determined.

Article 19
Publication of sanctions

Administrative sanctions and measures
imposed in the cases referred to in Articles 17 and 18(1) shall be published
without undue delay including information on the type and nature of the breach
and the identity of persons responsible for it, unless such publication would
seriously jeopardise the stability of financial markets.

Where publication would cause a
disproportionate damage to the parties involved, competent authorities shall
publish the sanctions on an anonymous basis.

Article 20
Application of sanctions by the competent authorities

When determining the type of administrative
sanctions or measures and the level of administrative pecuniary sanctions, the
competent authorities shall take into account all relevant circumstances,
including:

(a)
the gravity and the duration of the breach;

(b)
the degree of responsibility of the responsible
natural or legal person;

(c)
the financial strength of the responsible
natural or legal person, as indicated by the total turnover of the responsible
legal person or the annual income of the responsible natural person;

(d)
the importance of profits gained or losses
avoided by the responsible natural or legal person, insofar as they can be
determined;

(e)
the losses for third parties caused by the
breach, insofar as they can be determined;

(f)
the level of cooperation of the responsible
natural or legal person with the competent authority;

(g)
previous breaches by the responsible natural or
legal person.

Article 21
Reporting of breaches

1.           Member
States shall establish effective mechanisms to encourage reporting of breaches
of the provisions of this Regulation to competent authorities.

2.           The
mechanisms referred to in paragraph 1 shall include at least:

(a)
specific procedures for the receipt of reports
on breaches and their follow-up;

(b)
appropriate protection for persons who report
potential or actual breaches;

(c)
protection of personal data concerning both the
person who reports the breaches and the natural person who is allegedly
responsible for a breach, in compliance with the principles laid down in
Directive 95/46/EC.

3.           The
payment service providers shall establish appropriate procedures for their
employees to report breaches internally through a specific channel.

Article 22
Monitoring

Member States shall require competent
authorities to effectively monitor, and take necessary measures with a view to
ensuring, compliance with the requirements of this Regulation.

CHAPTER V

IMPLEMENTING POWERS

Article 23
Committee procedure

1.           The Commission shall be
assisted by the Committee on the Prevention of Money Laundering and Terrorist
Financing, hereinafter referred to as ‘the Committee’. The Committee shall be a
committee within the meaning of Regulation (EU) No 182/2011.

2.           Where reference is made to
this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

CHAPTER VI

DEROGATIONS

Article 24
Agreements with territories or countries mentioned in Article 355 of the
Treaty

1.           The Commission may
authorise any Member State to conclude agreements with a country or territory which
does not form part of the territory of the Union mentioned in Article 355 of
the Treaty, which contain derogations from this Regulation, in order to allow
for transfers of funds between that country or territory and the Member State
concerned to be treated as transfers of funds within that Member State.

Such agreements may be authorised only if all
the following conditions are met:

(a)
the country or territory concerned shares a
monetary union with the Member State concerned, forms part of the currency area
of that Member State or has signed a Monetary Convention with the Union
represented by a Member State;

(b)
payment service providers in the country or
territory concerned participate directly or indirectly in payment and
settlement systems in that Member State;

and

(c)
the country or territory concerned requires
payment service providers under its jurisdiction to apply the same rules as
those established under this Regulation.

2.           Any Member State wishing
to conclude an agreement as referred to in paragraph 1 shall send an
application to the Commission and provide it with all the necessary
information.

Upon receipt by the Commission of an
application from a Member State, transfers of funds between that Member State and the country or territory concerned shall be provisionally treated as transfers
of funds within that Member State, until a decision is reached in accordance
with the procedure set out in this Article.

If the Commission considers that it does not
have all the necessary information, it shall contact the Member State concerned within two months of receipt of the application and specify the additional
information required.

Once the Commission has all the information it
considers necessary for appraisal of the request, it shall notify the
requesting Member State accordingly within one month and shall transmit the
request to the other Member States.

3.           Within three months of the
notification referred to in the fourth subparagraph of paragraph 2, the
Commission shall decide, in accordance with the procedure referred to in
Article 23(2) whether to authorise the Member State concerned to conclude the
agreement referred to in paragraph 1 of this Article.

In any event, a decision as referred to in the
first subparagraph shall be adopted within 18 months of receipt of the
application by the Commission.

CHAPTER VII

FINAL PROVISIONS

Article 25
Repeal

Regulation (EC) No 1781/2006 is repealed.

References to the repealed Regulation shall
be construed as references to this Regulation and shall be read in accordance
with the correlation table in the Annex.

Article 26
Entry into force

This Regulation shall enter into force on
the 20th day following that of its publication in the Official Journal of
the European Union.

It shall apply from [coincide with the
date of transposition of Directive xxxx/yyyy].

This Regulation shall be binding
in its entirety and directly applicable in all Member States.

Done at Strasbourg,

For the European Parliament                       For
the Council

The President                                                 The
President

ANNEX

Correlation table referred to in Article 25.

Regulation (EC) No 1781/2006 || This Regulation

Article 1 || Article 1

Article 2 || Article 2

Article 3 || Article 3

Article 4 || Article 4(1)

Article 5 || Article 4

Article 6 || Article 5

Article 7 || Article 7

Article 8 || Article 7

Article 9 || Article 8

Article 10 || Article 9

Article 11 || Article 16

Article 12 || Article 10

|| Article 11

|| Article 12

|| Article 13

Article 13 || Article 14

Article 14 || Article 15

Article 15 || Articles 17 to 22

Article 16 || Article 23

Article 17 || Article 24

Article 18 || -

Article 19 || -

|| Article 25

Article 20 || Article 26

[1]               OJ L 345, 8.12.2006, p. 1.

[2]               FATF is the international body established by the
Paris G7 summit in 1989, and which is considered as the world standard in the
fight against money laundering and terrorist financing.

[3]               OJ L 309, 25.11.2005, p. 15.

[4]               OJ L 214, 4.8.2006, p. 29.

[5]               COM (2010)673 final.

[6]               COM(2012)10 final and COM(2012)11 final.

[7]               COM(2010)716 final.

[8]               The Commission report, the replies from stakeholders
and the feedback statement are available at http://ec.europa.eu/internal_market/company/financial-crime/index_en.htm

[9]               The study is available at http://ec.europa.eu/internal_market/company/financial-crime/index_en.htm

[10]             Ibidem.

[11]             The Impact assessment is available at http://ec.europa.eu/internal_market/company/financial-crime/index_en.htm

[12]               OJ C , , p. .

[13]               OJ C , , p. .

[14]               OJ C , , p. .

[15]               http://register.consilium.europa.eu/pdf/en/08/st11/st11778-re01.en08.pdf

[16]               OJ L 344, 28.12.2001, p. 70.

[17]               OJ L 139, 29.5.2002, p. 9.

[18]               OJ L , , p. .

[19]               OJ L 281, 23.11.1995, p. 31.

[20]               OJ L 266, 9.10.2009, p. 11.

[21]             OJ L 94, 30.3.2012, p. 22.

[22]             OJ L 319, 5.12.2007, p. 1.

[23]             COM(2010)716 final.

[24]             OJ L 55, 28.2.2011, p. 13.